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Lockheed (LMT) Wins Contract to Support Submarine Program

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Lockheed Martin Corporation LMT recently clinched a modification contract for the procurement of submarine new construction kits, equipment, and installation. The deal has been awarded by the Naval Sea Systems Command, Washington, DC.

Valued at $35.7 million, the contract is expected to conclude in May 2025. The work related to the contract will be executed in Syracuse, NY.

Lockheed’s Position in the Submarine Market

Countries across the globe have been strengthening their defense system due to rising geo political tensions. Submarines form an integral part of any strong defense system as it improves underwater warfare capabilities, and thus entails a huge defense spending. This has resulted in strong demand for submarines across the globe, which has been benefiting defense majors like Lockheed Martin.

Backed by 40 years of full lifecycle submarine platform support in eight countries, Lockheed Martin demonstrates in-depth experience and knowledge in submarine combat system design, test, integration, certification and sustainment. The company designs, develops and integrates submarine combat systems for the United States, the U.K., Canada, Brazil, Spain, and others.

Impressively, Lockheed Martin is the U.S. Navy’s submarine combat system integrator, spanning 72 submarines of multiple classes and including new construction submarines and combat system modernisation across the entire fleet.

No doubt the aforementioned factors underscore Lockheed’s significance in the submarine market. The latest contract win is a testament to that. Such huge programs and recent contract wins present huge opportunities for Lockheed Martin to grow in the days ahead. This, in turn, is likely to bolster its revenues from the submarine segment of the business.

Looking Ahead

Going forward, the demand for submarines should remain strong as countries globally increase their defense spending to strengthen their underwater capabilities. Evidently, per a report from Research and Markets firm, the global submarine market is projected to witness a CAGR of 4.36% through 2031. Such strong growth trends highlight ample growth opportunities for Lockheed Martin. Other defense majors who are likely to benefit from this growth trend are BAE Systems BAESY, General Dynamic GD and Northrop Grumman NOC.

For instance, BAE Systems’ Astute class submarines are the U.K.’s largest and most powerful attack submarines and can strike at targets up to 621 Miles from the coast with pin-point accuracy.

The long-term earnings growth rate estimate for BAE Systemsis pegged at 4.8%. Shares of BAESY have appreciated 3.9% in the last one year.

General Dynamics is a renowned submarine manufacturer. Its Virginia-class submarine is a stealth submarine that would be suitable for any marine warfare. The submarine excels in littoral and open-ocean environments, and collects intelligence critical to the full spectrum of warfare.

The Zacks Consensus Estimate for General Dynamics’s 2021 earnings has been revised upward by 0.4% in the last 60 days. GD’s shares have gained 29.2% in the last one year.

Northrop Grumman designs, develops, and produces communication systems, sensors, signal processing, and electronic warfare systems to counter the increasingly sophisticated sea-based threats. Northrop Grumman provides launch systems for the submarines, and its eject launch technology has powered more than 7,000 successful launches.

The Zacks Consensus Estimate for Northrop Grumman's 2021 earnings has been revised upward by 2.6% to $25.57. Shares of Northrop Grumman have appreciated 18.9% in the past one year.

Price Movement

In the past one year, shares of Lockheed Martin have lost 7.8% compared with the industry’s decline of 36.4%.

Zacks Investment Research
Zacks Investment Research

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Zacks Rank

Lockheed Martin currently carries a Zacks #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

Northrop Grumman Corporation (NOC) : Free Stock Analysis Report

General Dynamics Corporation (GD) : Free Stock Analysis Report

Bae Systems PLC (BAESY) : Free Stock Analysis Report

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